biaggio Posted March 14, 2012 Share Posted March 14, 2012 How do you get an EV of 960m? did it in my head roughly = share price of $23.60 x 39374 fully diluted shares + debt - cash I could be wrong, but I don't think you should use fully diluted shares for enterprise value (at least, that's not how I've seen it done). http://www.investopedia.com/terms/e/enterprisevalue.asp#axzz1p15UAnL3 http://en.wikipedia.org/wiki/Enterprise_value Using that method, current EBIX EV would be closer to ±850m Otherwise you get an EV that is higher than the current market cap. I was never sure...I picked the higher number to be conservative. Thanks for the heads up. Link to comment Share on other sites More sharing options...
alpha231616967560 Posted March 14, 2012 Share Posted March 14, 2012 I also thought it was a good conference call (transcript here for reference: http://www.morningstar.com/earnings/earnings-call-transcript.aspx?t=EBIX®ion=USA&culture=en-US ), lots of good stuff. I had these thoughts / concerns from it: 1. RR pretty much skirted the question about organic growth, and it appears to be lower than in the past. In the past, he has spoken specifically about that number, so I am skeptical. Their long term target is 14% annualized, and I don't think that they came near that in 2011. My back-of-the-napkin estimate after backing out acquisitions is more like 8 or 9%. I just wonder what would be the cause of that, since they are putting such an emphasis on new sales at present. 2. The reviews on their mobile apps are pretty negative so far. I haven't downloaded. This is admittedly a small part of the package at this stage, but since they are brand new it would be nice if they worked well. 3. Kerris: "We expect our effective tax rate will continue to rise as we generate greater amounts of taxable income in jurisdictions with higher statutory tax rates." - and note 7 in the 10Q gives more color on this. This is bound to become a significant impact on their margins as the NOLs roll away and the tax rate continues to climb. I just wonder to what extent... I have a significant position in this company, so I am just airing my concerns here in hopes that it generates some discussion. I would love to be convinced that my concerns are nothing to be concerned about... alpha23 Link to comment Share on other sites More sharing options...
Liberty Posted March 14, 2012 Author Share Posted March 14, 2012 1. RR pretty much skirted the question about organic growth, and it appears to be lower than in the past. In the past, he has spoken specifically about that number, so I am skeptical. Their long term target is 14% annualized, and I don't think that they came near that in 2011. My back-of-the-napkin estimate after backing out acquisitions is more like 8 or 9%. I just wonder what would be the cause of that, since they are putting such an emphasis on new sales at present. I think they're just being careful. In the past they answered that question with lots of details and it caused a lot of controversy because others calculated organic growth differently, etc. So now they don't give details about this. And I understand why; they don't acquire companies to keep running them as is, they immediately integrated them and cross-sell as much as possible, making it very hard to break things down. It's not just some accounting trick, it's how they squeeze the most value from acquisitions. 2. The reviews on their mobile apps are pretty negative so far. I haven't downloaded. This is admittedly a small part of the package at this stage, but since they are brand new it would be nice if they worked well. Where have you seen this? I don't see reviews in iTunes. I wouldn't worry to much yet. It's still early, the apps will probably keep maturing, and people with grievances are always much more motivated to leave feedback than those who think things are fine. 3. Kerris: "We expect our effective tax rate will continue to rise as we generate greater amounts of taxable income in jurisdictions with higher statutory tax rates." - and note 7 in the 10Q gives more color on this. This is bound to become a significant impact on their margins as the NOLs roll away and the tax rate continues to climb. I just wonder to what extent... I think in a past call they estimated their long-term tax rate at 10-15%. It could take a while to get there, though, and it's still pretty good. The way their SaaS model works, the more customers they have, the higher their margins can be because each additional client only has marginal impact on costs, so I wouldn't be surprised to see them grow their operating margins further above 40% over time, even with the drag of higher taxes and sales. Just my 2 cents Canadian. Link to comment Share on other sites More sharing options...
Liberty Posted March 16, 2012 Author Share Posted March 16, 2012 10K is out: http://www.sec.gov/Archives/edgar/data/814549/000081454912000006/ebix-2011x10k.htm The company has added some info about their acquisition strategy. It matches pretty well with what I've been saying for a while, IMHO: Acquisition & Integration Strategy The Company looks at its acquisition strategy as a good way to keep expanding its reach in the insurance and financial sectors, as well as an effective utilization of the operating cash generated from its business. However, the Company does not believe that this acquisition strategy is critical to its future profitability or liquidity. Management looks at acquisitions as a part of the growth strategy but not central to it. We look at making complimentary accretive acquisitions as and when the Company has sufficient liquidity, assured cash flows, and access to financing at attractive interest rates to do so. The Company' looks to acquire businesses that are complementary to Ebix's existing products and services. In this regard the Company's goal is to provide comprehensive, on-demand process based solutions which simplify insurance industry transactions by carrying data from one end to another seamlessly. Any acquisition made by Ebix typically will fall into two different buckets - one, wherein the acquired company has products that are competitive to our existing products and services; and two, wherein the acquired Company's products and services are an extension of our existing products and services. In cases where an acquired company's products and services are competitive to our existing products and services, the Company immediately strives towards the goal of providing a single product or service in any functional area, with a common code base around the world rather than have multiple products addressing the same area. In each case, the Company immediately works towards assimilating the best of breed functionality on a common architecture approach, to provide a single product or service to its end customers. The Company's goal remains to provide a simplistic solution for its customer base, while ensuring that any product or service integrates seamlessly with other existing or outside functionalities. In each case, there could be a period wherein one of the two products/services is not offered for sale while the best of breed solution is being created. Irrespective of whether the acquired company's product/service is retired or the existing product/service is retired, the Company is focused on maximizing operational efficiency for our business while creating new cutting edge products and services that can replace both existing or acquired product or service offerings in order to make future product sales and maintenance more efficient. Once an acquisition is made, the infrastructure, personnel resources, sales, product management, development etc. are integrated tightly to ensure that efficiencies are maximized and redundancies eliminated. No separate sales, development, product management, implementation or quality control groups are maintained post-closing so as to ensure that the integration is efficient across all fronts. The Company integrates all and where appropriate centralizes certain key functions such as product development, information technology, marketing, sales, finance, administration, quality assurance, etc. immediately after an acquisition, to ensure that the Company can rapidly leverage cross-selling opportunities and to realize cost efficiencies. While doing so, the Company resources and infrastructure is leveraged to work across multiple functions, products and services making it neither practical nor feasible to accurately and separately track and disclose the specific revenues and earnings impact from the business combinations we have executed after they have been acquired. Consequently the concept of “acquisitive growth” versus “organic revenue growth” becomes rather obscure given the dynamics and underlying operating principals of Ebix's acquisition and growth strategy. This tactic is a key part of our business strategy which facilitates high levels of efficiency, consistent end-to-end vision for our business, and differentiates the Company from our competitors. In certain of the acquisitions made by the Company, there might be contingent consideration terms associated with the achievement of certain designated revenue targets for the acquired Company. In each case wherein such contingent consideration terms are present, Ebix allows the acquired company to count the new sale of our existing products and services as also their products and services towards meeting the revenue target. This structure allows us to still carry on with our integration strategy while enabling the acquired company to be eligible for a revenue based contingent purchase consideration, irrespective of whether the revenues came from the sale of our existing products/services or from the acquired company's products/services or even completely disparate products/services from complementary functionalities that the acquired company had no access to earlier before the acquisition. Accordingly we are able to maximize operational productivity while allowing the acquired company access to a great opportunity for a contingent reward. The Company's integration strategies are targeted at improving the efficiency of our business, centralizing key functions, exercising better control over our operations, providing consistent technology and product vision across functions, entities and products. All of this is a key part of our business philosophy that enables Ebix to operate a high levels of efficiency, facilitate a consistent end-to-end vision for the industry, and differentiates the Company from other businesses. Interesting that for earnouts they count all sales. This means that someone looking at this info might conclude that more growth is coming from the recent acquisition than is really the case (because some sales can be existing products integrated back into the acquired division), leading them to under-estimate actual 'organic' growth (whatever that actually means in this case, because it *is* hard to know with this model what kind of growth is organic or not). 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mankap Posted March 17, 2012 Share Posted March 17, 2012 Organic growth I calculated 11.8% organic growth for 2011 from the nos. given in 10k.Here are nos. for organic growth.Life and annuity revenue increased by 5.0m ,P&C increased by 7.2m ,there was 2.4 m increase in CRM, 4.3 m increase in Broker systems and 3.2 m decrease in carrier system revenue.So the total organic increase is 15.7m which is 11.8% over 2010 revenue.Ebix did not acquire any company in life,P&C and CRM in 2011.There were two acquisitions in 2011 and both were in Health sector. If Carrier and BPO division had not lost revenue organic growth would have been >14%. I think Ebix can easily grow revenue by 20%/year with organic growth and a acquisition utilizing just 1/3 of FCF.They still have 2/3 of FCF left for other things .To pay 13 P/E for a company growing at 20% is really good deal. I am impressed by the organic growth in Australia and Brazil.In last 2 years revenue has increased almost by 50% from $ 21m to $ 32m in Australia.I think this is all organic growth since they have not acquired any company in Australia in last 2 years. Organic growth in Brazil is more than 50% in 2011.Revenue increased to 10m from 4m .They have the first mover advantage in Brazil and I am hoping they can repeat success of Australia in Brazil. They should highlight the success of Brazil and Australia on the call. Link to comment Share on other sites More sharing options...
Liberty Posted April 2, 2012 Author Share Posted April 2, 2012 http://finance.yahoo.com/news/ebix-enters-medical-e-learning-110000991.html Cash acquisition, should be immediately accretive. Seems like one more strategic add on to better position the company to be able to cross-sell health exchanges after getting through the door be replacing paper processes. To me it seems like on the insurance side they have pretty much all the pieces of the puzzle, all they need to do is sell, which is why they've been adding salespeople. On the health side, they are still getting new pieces, but they are positioning themselves well to benefit from that industry's move to SaaS software, digitalization of documents, and exchange-mediated transactions... Based on what is known, seems like a good move. Link to comment Share on other sites More sharing options...
mankap Posted April 2, 2012 Share Posted April 2, 2012 Also it fits into what ADAM is doing on the medical education front. I want to Taimma's website , there technology also looks very good.They have the technology for Mobile apps which Ebix can use in their other products. Link to comment Share on other sites More sharing options...
Liberty Posted April 2, 2012 Author Share Posted April 2, 2012 Pretty good website indeed: http://www.taimma.com/ Link to comment Share on other sites More sharing options...
alpha231616967560 Posted April 2, 2012 Share Posted April 2, 2012 Looks like mostly an augmentation of the ADAM offerings and acquisition of some valuable mobile expertise. Since Taimma is focused almost exclusively on training software for Biotech and Pharma, I wonder what the connection to EBIX's larger business plan is. Whatever it is, at least they aren't overpaying for it. I was impressed with "iTunes recently approved Taimma’s launch of Flash training content that runs on iPad, iPad2, and the iPhone" - no small feat with Apple's anti-flash stance. Link to comment Share on other sites More sharing options...
Liberty Posted May 4, 2012 Author Share Posted May 4, 2012 As is customary for this stock during the pre-earnings buyback blackout, the shorts have made it drop quite a lot on no news. Good buying opportunity, IMO. Link to comment Share on other sites More sharing options...
keerthiprasad Posted May 4, 2012 Share Posted May 4, 2012 As is customary for this stock during the pre-earnings buyback blackout, the shorts have made it drop quite a lot on no news. Good buying opportunity, IMO. I figured it was the same thing...no news but considerable drop... Link to comment Share on other sites More sharing options...
mankap Posted May 4, 2012 Share Posted May 4, 2012 Rather there is a positive news today regarding Ebix's agreement to develop Pet Insurance Exchange for CurePet. Ebix will be paid recurring monthly fees for the development.Ebix can sell the exchanges so developed in other countries. Not many companies are probably thinking of developing exchanges for petcare. Link to comment Share on other sites More sharing options...
Liberty Posted May 4, 2012 Author Share Posted May 4, 2012 Rather there is a positive news today regarding Ebix's agreement to develop Pet Insurance Exchange for CurePet. Ebix will be paid recurring monthly fees for the development.Ebix can sell the exchanges so developed in other countries. Not many companies are probably thinking of developing exchanges for petcare. Yeah, it's probably not a big market so far, but I know they wouldn't have gotten in if they couldn't get their 40%+ margins, so it should be profitable, and having first mover's advantage could mean that they'll own that market. Who knows, maybe in a few years it'll be of a decent size. People spend a lot on their pets in bull markets! Another piece of recent news: http://www.ebix.com/pressrelease_text.aspx?artid=229 New 100m credit facility at LIBOR plus 1.50%. Link to comment Share on other sites More sharing options...
mankap Posted May 4, 2012 Share Posted May 4, 2012 I added to my Ebix holding today. Link to comment Share on other sites More sharing options...
Liberty Posted May 8, 2012 Author Share Posted May 8, 2012 EBIX plans to release its 2012 first quarter earnings results on Tuesday morning, May 8th and will host a conference call to review the results at 11:00 a.m. EDT the same day (details below). The call is open to the general public. US/Canada Dial-in #: +1(973) 409-9690 Please call five minutes in advance. Audio Replay: Will be available at http://www.ebix.com; click on Investor Home Page – after 2:00 p.m. EDT on Tuesday, May 8th . Link to comment Share on other sites More sharing options...
DCG Posted May 8, 2012 Share Posted May 8, 2012 Reports Q1 (Mar) earnings of $0.40 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.40; revenues rose 9.2% year/year to $43.8 mln vs the $45.54 mln consensus. Link to comment Share on other sites More sharing options...
Liberty Posted May 8, 2012 Author Share Posted May 8, 2012 Ebix delivered the following results for the first quarter of 2012: Revenues: Total Q1 2012 revenue was $43.8 million, an increase of 9% on a year-over-year basis, as compared to Q1 2011 revenue of $40.1 million. Earnings per Share: Q1 2012 GAAP diluted earnings per share rose 8% year-over-year to $0.40, as compared to $0.37 in the first quarter of 2011. For purposes of the Q1 2012 EPS calculation, there was an average of 39.5 million diluted shares outstanding during the quarter, as compared to 41.5 million diluted shares outstanding in Q1 of 2011. Operating Cash: Cash generated from operations for the fiscal first quarter was $13.8 million, up 33% year-over-year. Margins: In Q1 2012 the Company reported operating margins of 42% compared to 39% in Q1 of 2011. Channel Revenues: The Exchange channel continued to be the largest channel for Ebix accounting for 79% of the Company's 1Q 2102 Revenue as compared to 78% in Q1 2011. Not the most impressive quarter ever, but they've been saying for a while that all the big investments they've made in senior sales people should only start paying off in the second half of 2012, so patience is required. I'm pleased with the growing margins despite all this, and the operating cash growing over 30% YoY is very nice. The carrier channel looks bad, but I wonder if we're still seeing impacts of their switch to 100% on demand rather than having some licensed stuff there (which drops revenues in the short term but should be better in the long term). Ironically, the lukewarm quarter can be good in the long-term if it allows them to repurchase a bunch more shares under $20. I think that would be a very good use of cash. Link to comment Share on other sites More sharing options...
Liberty Posted May 8, 2012 Author Share Posted May 8, 2012 Conference call was interesting. They set a goal for the next 5 years. Want to get to half a billion of revenue while keeping margins in the 40% range. No guarantees and it's not guidance, but if I remember correctly, the last time they had a goal a few years ago, they under-promised and over-delivered, and that was in the middle of the financial crisis. The beauty is that as they grow, their costs don't go up linearly with the number of customers, so they margins should keep improving (once the software has been written and the exchanges have been built, whether you have 10 or 1000 customers, your costs are very similar, but the number of transactions on exchanges go up exponentially with the number of participants - kinda like VISA and Mastercard). They said they delayed two big exchange products for strategic reasons, so that probably helps explain the slower growth in exchanges this quarter. At first I wasn't sure what a "strategic reason" could be, but then I remembered how they do things and it makes sense. Because of the networking effect, they want to launch new exchanges with the top 3 distributors and some of the biggest carriers already on board, because these then bring all the small fish with them. Maybe one of those big players had a delay in implementation, or maybe they found an extra big player to add to the group, so it was worth pushing back launch a bit to do it right. That's just my best guess, though. They say their deal and acquisition pipelines are strong, with some larger deals than before because they've now reached a size where they can bid on bigger deals, and because the new sales force helps. ADAM + Taimma + Healthconnect = pretty much one integrated thing now. Seems to have great strategic fit and give EBIX capabilities that no other player has. As previously mentioned, the new sales people aren't all showing results yet because training takes a while and then there's the sales cycle, but it should start to pay off later this year. (the sales people are selling complex products that are at the heart of their customer's companies, and they're dealing with top executives, so EBIX can't just hire your average software salesgirl and let her loose after 2 days of training... but I'm fine with it as being in an industry that requires a highly skilled salesforce just means there's one more barrier to entry for smaller players) Some sales partnerships announced with Microsoft, Accenture, Unisys, CGI.. Robin addressed the big drop in carrier channel, saying that part of it was because they changed from giving perpetual licenses to a recurring subscription model, and part of it was because that channel is mostly made up of P&C insurers in the US, and these guys are 1) used to buying perpetual licenses for software and then keeping it forever and 2) they're not spending on IT right now because they have a big margin crunch. Raina said they won't sell their IP with perpetual licenses, and won't compromise their margins, so they've decided not to focus on that channel for now, but they seem optimistic that this channel will grow nicely in the future. I think if there's a hard insurance market and P&C insurers start spending on IT again, EBIX should be very well positioned to get its share, and once in, the revenues should be recurring for a very long time, not just a lump sum and then nothing for years and years. BPO channel is very tied to construction industry, so pretty flat right now, but if US construction turns, should grow nicely. They also hinted that more acquisitions might be coming, maybe a big one, and they seem to want to pay for it with debt rather than stock. I wouldn't mind that considering their track record of making acquisitions that are both strategic (building a puzzle piece by piece that ends up being worth more than the sum of its parts), and accretive in the short term (ADAM had a goal of 0.15 cents for 2011. naysayers said that was impossible. It ended up doing 0.25 cents AND EBIX repurchased all the shares it emitted for the acquisition at a substantial discount, so that was doubly good). Link to comment Share on other sites More sharing options...
alpha231616967560 Posted May 8, 2012 Share Posted May 8, 2012 Decent quarter. Plodding along at ~40% profit margins and 26% ROE is OK with me. What a short call - this company seems fairly well ignored by Wall Street. That is somewhat reassuring given the large short interest, which I don't believe would exist were the daily volume higher (i.e. if more analysts knew the company). - Regarding the .5B revenue run rate, I remember him saying something similar a while back: From the Q3 2009 CC: Robin added, “We are going to target annualized revenue run rate of $200 million by Q4 of 2011 with 42 percent or more operating margins. I will emphasize that this goal is an aspiration that may or may not be finally achieved by the company. Accordingly, it should not be construed as guidance on the company’s future results, by the management.” They are currently on target for just under 200m (~185m) for 2012. So the goal was a bit high, but he has done a good job at consistently setting up the goalposts. - I also like Robin's insistence on not selling IP but "renting" it instead, and I like the insistence on keeping the margins intact. There is no trace of the "revenue at any cost" model that so many others (Salesforce, for example) have followed. This is one very attractive aspect of EBIX's business as long as new large businesses keep signing up for it. - Does anyone know about CSE (?), the company that Robin mentioned as being the prominent on-demand insurance services player (who he said EBIX wants to eclipse in revenues...)? A quick web search yielded some results for CSE insurance, but they seem to be more of a broker (a la Geico model, actually) than a service provider. Link to comment Share on other sites More sharing options...
Liberty Posted May 8, 2012 Author Share Posted May 8, 2012 Does anyone know about CSE (?), the company that Robin mentioned as being the prominent on-demand insurance services player (who he said EBIX wants to eclipse in revenues...)? A quick web search yielded some results for CSE insurance, but they seem to be more of a broker (a la Geico model, actually) than a service provider. I believe he was talking about CSC http://www.google.ca/finance?q=NYSE%3ACSC Looking at their financials puts EBIX's achievements in perspective... Link to comment Share on other sites More sharing options...
alpha231616967560 Posted May 8, 2012 Share Posted May 8, 2012 I believe he was talking about CSC http://www.google.ca/finance?q=NYSE%3ACSC Looking at their financials puts EBIX's achievements in perspective... Aha - thanks Liberty. That makes sense. I've looked at them a few times in the past. Insurance services seems to be a relatively small part of their business, and they seem to be a much more traditional software services co. I notice also that they have a new CEO and CFO, and that their net margin is around 5%. One other recent EBIX note that is a bit off the beaten path is that I saw some photos of one of their recently remodeled facilities in India on Robin's Facebook page. It is a bit bizarre. Pink neon everywhere and a flashy car in the lobby. It looks a bit like a nightclub. I put it down to cultural difference (Bollywood is similarly different by American standards), but an interesting data point nonetheless. Link to comment Share on other sites More sharing options...
Liberty Posted May 8, 2012 Author Share Posted May 8, 2012 One other recent EBIX note that is a bit off the beaten path is that I saw some photos of one of their recently remodeled facilities in India on Robin's Facebook page. It is a bit bizarre. Pink neon everywhere and a flashy car in the lobby. It looks a bit like a nightclub. I put it down to cultural difference (Bollywood is similarly different by American standards), but an interesting data point nonetheless. I saw those photos too. I'm guessing the old Mercedes is there to make some kind of point, ie. they might be using it internally as an example of their design/engineering philosophy and put it there remind employees of it or something (Steve Jobs did that kind of thing with Cuisinart appliances and Porches and such). Or it could be a cultural thing and maybe in India it's common to put old Mercedes on pedestals :) As for the nightclub vibe, well, he did write that the area was designed for staff to relax. Having a nice work environment certainly helped Google to retain and attract talented programmers, so that's probably what he's going for. Who needs another endless bland cube farm? Link to comment Share on other sites More sharing options...
Liberty Posted May 15, 2012 Author Share Posted May 15, 2012 http://beta.fool.com/mhenage/2012/05/15/ebix-earnings-behind-headlines/4595/ Link to comment Share on other sites More sharing options...
Liberty Posted May 23, 2012 Author Share Posted May 23, 2012 CEO exercised 1.2 million options he accumulated over the past decade. http://www.sec.gov/Archives/edgar/data/814549/000118143112031758/xslF345X03/rrd346327.xml Link to comment Share on other sites More sharing options...
mankap Posted May 23, 2012 Share Posted May 23, 2012 Now Robin owns 13% of the outstanding.His holding has gone up to 5.0m shares now. His interests are aligned with shareholders more than ever before. Link to comment Share on other sites More sharing options...
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